ROTH IRA Recharicterization
I have a client who has mistakenly started to fund a ROTH IRA for 2021. His 2021 income is too high and he is not eligible. I know that we can re-characterize the contributions and begin to fund a Non-Deducible IRA. If we do this, will it negate the ability to do a ROTH IRA conversion of the Non-deductible IRA for 2021?
Permalink Submitted by Alan - IRA critic on Fri, 2021-06-25 22:26
After the Roth contribution is recharacterized as a TIRA contribution, the TIRA contribution can be converted back to Roth without delay. However, if client has any other TIRA balance or accounts, the conversion will be mostly taxable.